Newsletter
Suscríbete a nuestro Newsletter y entérate de las últimas novedades.
https://centrocompetencia.com/wp-content/themes/Ceco
This note is published as part of an agreement between CeCo and ASCOLA Latam. Both organizations agreed to cover some of the articles discussed at the 2025 ASCOLA annual conference, held in Chicago. This particular note is a summary prepared by Annika Stöhr, Oliver Budzinski and Josefine Dölker about their presentation at the aforementioned conference. To see CeCo’s translation of this note into spanish, click here.
Annika Stöhr, Oliver Budzinski, and Josefine Dölker analyze how strategic oversupply in music streaming may constitute an anticompetitive practice used by dominant labels and platforms to reinforce their market power.
___________________________________________________________________
The digital transformation of media markets has reshaped how cultural goods are produced, distributed, and consumed. Few sectors illustrate this more starkly than the music industry. Over the past decade, streaming platforms such as Spotify, Apple Music, and Amazon Music have replaced physical sales and downloads as the most dominant distribution channel. Today, streaming accounts for more than two-thirds of global recorded music revenues, and playlists rather than radio stations or music TV serve as the primary gateway for music discovery.
This new structure offers consumers unprecedented access to music. Yet beneath the surface of convenience lies a more troubling dynamic. Streaming markets are highly concentrated, both upstream – where a handful of major record labels (‘Majors’) dominate the supply of music – and downstream – where a few global platforms control distribution. Such concentration raises concerns about how market power is exercised and whether new forms of anticompetitive behavior are emerging.
One particularly concerning development is the potential for strategic oversupply: the deliberate flooding of the market with excessive amounts of content by dominant players. In music streaming, major labels – and artists – may release re-recordings, deluxe albums, or frequent singles not primarily to meet consumer demand and/or because they are particularly innovative, but to saturate algorithms and playlists. This strategy may crowd out independent artists and labels, reinforce the dominance of the incumbents at the expense of newcomers, and manipulate how consumers experience choice and the consumption of cultural goods.
To understand why strategic oversupply matters and how and where it may occur, it is essential to examine the structure of the music industry’s supply and distribution chain. Each step in the chain represents both a functional role and a potential source of market power.
This chain is vertically interdependent, and concentration at each level can create cascading effects. The Majors not only dominate recordings but also own significant publishing arms, giving them dual control over compositions and recordings. When combined with platform power, this integration magnifies the potential for abuse. This is particularly relevant because the creator level is characterized by strong superstar effects, concentrating revenue-drawing power in comparatively few hands (Rosen 1981) and generating strong competitive advantages for incumbents. This creates barriers for newcomers and innovative unknown creators due to information asymmetries (MacDonald 1988), network effects (Adler 1985), and the scarcity of attention (Budzinski & Gaenssle 2018). If superstars are distributed asymmetrically across players in the downstream market, these inherent advantages for incumbents and larger players exacerbate the potential for (ab-)using existing market power.
At the upstream level, three major record labels (“The Big Three”) – Universal Music Group, Sony Music Entertainment, and Warner Music Group – control the majority of recorded music rights. These firms operate extensive portfolios of labels and artists, giving them significant bargaining power over streaming services. Major labels function as large corporations that own and operate many different subsidiary labels, each potentially focusing on different genres or artist types. They wield substantial market power, controlling a large share of the music market and possessing the resources (e.g., money, data, and rights, but also access to artists) to fund and distribute music on a global scale. The labels are vertically integrated and often handle all aspects of the music production process, including recording, manufacturing, distribution, and publishing. The dominance of major labels, including anticompetitive arrangements among them (Srivastava 2006), has been a long-standing trend (leading to a wide spread of abusive practices, e.g., the so-called payola practice in the radio era), further fueled by a decrease in the number of major labels over time, consolidating into the «Big Three» from a larger «Big Five» or «Big Six» in earlier eras. Independent labels exist, but their market share remains small, and they often rely on distribution agreements with majors.
At the distribution level, streaming platforms act as powerful intermediaries. They do not simply provide a neutral marketplace for music. Instead, they curate consumer experiences through playlists, personalized recommendations, and search functions. These platforms also control remuneration structures, distributing royalties based on the number of streams relative to total plays. Spotify, for example, does not pay artists a fixed amount per stream but instead distributes royalties based on a pro-rata model, where a portion of total revenue is allocated based on each artist’s «streamshare» of the overall market. This pro-rata model inherently favors content that generates large volumes of plays, thereby incentivizing oversupply strategies.
At the consumer-facing level, a significant share of users experiences music primarily through playlists and algorithmic feeds, with social media platforms playing an increasingly relevant role in music discovery. Unlike in physical markets, where shelf space was limited, the digital environment allows virtually unlimited content. Yet consumer attention remains scarce. As a result, visibility has become the critical competitive resource: the actors who can best position their content in playlists and recommendation feeds capture disproportionate attention and revenue, reinforcing the already inherent superstar effects.
Within this landscape, different user groups interact with music in distinct ways, which shapes how oversupply strategies operate. Casual listeners often consume music in the background and rely heavily on curated playlists and algorithmic feeds (Aguiar & Waldfogel 2021). For them, oversupply increases the likelihood that dominant labels’ songs will be repeatedly suggested across different playlists and contexts. By saturating discovery mechanisms, oversupply ensures that casual listeners encounter the same label’s or artist’s content again and again, reinforcing incumbents’ market position.
By contrast, fans engage more actively with music. They follow specific artists or genres and are less dependent on playlists for discovery. For them, oversupply may serve a different purpose: it maintains continuous visibility of their preferred artists, ensuring that new singles, re-recordings, or alternative versions keep the fan base engaged. In this group, oversupply leverages loyalty and the reputational pull of superstar artists, locking attention to dominant labels’ catalogues over time.
The concept of strategic oversupply is not new in economics. It is closely related to theories of strategic overinvestment and market foreclosure. Firms may deliberately produce more than necessary, not because the output is profitable in itself, but because it changes market conditions in their favor. Classic examples include building excess capacity to deter entry or engaging in predatory pricing to eliminate rivals.
In digital cultural markets, the scarce resource is not physical capacity but consumer attention (Loewenstein & Wojtowicz 2025). When dominant labels release an excessive volume of content, they create an artificial scarcity of attention. Playlists and algorithms have limited slots; consumer listening time is finite. By filling these slots with their own content, major labels may reduce the visibility of competing artists.
This strategy might be especially powerful in the streaming environment because algorithms reward frequency and popularity. Songs that are streamed more often are more likely to be recommended again, creating a positive feedback loop. Oversupply feeds this loop by increasing the probability that at least some songs from a major label or artists will catch algorithmic attention, thereby boosting overall visibility.
In music streaming, dominance and market concentration may appear at several points in the supply chain — labels, publishers, platforms — each of which could use oversupply strategically to entrench their position. Oversupply may manifest differently at the different stages of the supply chain. When combined, these practices can reinforce concentration and exclusion. Moreover, the economics of reputation and superstar phenomena amplify these dynamics, making oversupply a particularly effective exclusionary tool in cultural markets.
The global recording industry is dominated by the three Majors, which collectively control the vast majority of global market share. Their dominance stems not only from catalogue size but also from their reputational capital and ability to develop and promote superstar artists. In an attention-driven economy, superstars enjoy disproportionate consumer focus; labels may exploit this by oversupplying recordings from such artists, crowding playlists and recommendation feeds with multiple versions of basically the same content. They release frequent singles, deluxe editions of albums, and multiple versions of the same song. Re-recordings of older hits are increasingly common, often designed to generate new streams without significant investment in creativity. Such practices inflate the supply of content associated with superstar artists.
Empirical analysis shows that releases from major labels dominate the top streaming charts (Aguiar & Waldfogel 2021). The sheer volume of releases increases the probability that their content will appear in algorithmic recommendations. Independent labels, by contrast, cannot match this pace of output, leaving their artists at a competitive disadvantage. Independent labels lack both the scale and reputational clout to compete on the terms described above. Without comparable catalogues or superstar artists, they are unable to deploy such oversupply strategies to the same extent. Oversupply as a competitive strategy might thus be relevant primarily for dominant labels, who can leverage their market power and reputation effects to foreclose rivals.
Music publishing is likewise concentrated, with the publishing arms of the three major record labels (Sony Music Publishing, Universal Music Publishing Group, Warner Chappell) controlling much of the global catalogue of compositions. Their dominance rests on the sheer size of their repertoires. Additionally, with this vertical integration, the Majors control both recordings and compositions. This dual power magnifies oversupply strategies, enabling Majors to dominate not only playlists but also synchronization markets (film, TV, ads).
Large publishers can strategically oversupply licensing markets by aggressively pushing vast catalogues at once. Thanks to their dominance and reputation, licensees (advertisers, film producers, platforms) often prefer working with them, as their catalogues guarantee access to recognizable and reputable songs. Superstar artists (songwriters), whose reputations make their works particularly attractive, further reinforce this imbalance. Independent publishers, with smaller catalogues and fewer high-profile songwriters, cannot compete in terms of scale.
Here, oversupply can become abusive when dominant publishers use catalogue saturation and reputational leverage to crowd out independent compositions from licensing opportunities, reinforcing concentration in publishing markets.
Streaming platforms such as Spotify, Apple Music, and Amazon Music are the dominant distributors in the digital music market, acting as unavoidable trading partners for both labels and publishers. Their market power derives not only from their scale but also from their control over algorithmic recommendation systems and curated playlists. Streaming platforms play a crucial role in amplifying oversupply. Playlists such as Spotify’s “Today’s Top Hits” or “New Music Friday” are central to music discovery (Chambers 2023). Entry into these playlists can multiply streams overnight. Because major labels supply such a large volume of content, they are more likely to secure multiple slots. In addition, contractual relationships and promotional arrangements may further bias playlist inclusion in favor of established labels.
Platforms themselves may not engage in oversupply, but they amplify the effects of oversupply by dominant labels and publishers, e.g., through the incentives of the pro-rata payment system described above. Additionally, algorithmic bias toward frequently streamed and recently released content means that oversupply strategies by market leaders gain an additional boost. Superstar phenomena matter here: once oversupplied content from superstar artists gains a foothold in playlists, feedback loops in algorithmic recommendation further concentrate visibility.
Where platforms vertically integrate into content production or enter exclusive arrangements with labels, oversupply risks become even more acute. If platforms favor their own content or that of dominant partners, oversupply becomes a coordinated exclusionary practice at the distribution layer.
For consumers, oversupply creates the illusion of choice while reducing actual diversity. Playlists and feeds appear to offer endless variety, but in reality, they are dominated by the same labels and often the same artists. This might lead to choice overload and fatigue (Anglada-Tort et al. 2023), pushing consumers to rely even more heavily on curated playlists rather than exploring independently.
For independent artists, oversupply exacerbates economic dependence. Without access to playlists and algorithms, their visibility drops, streams remain low, and royalties decline. This creates a vicious cycle: limited revenue reduces resources for promotion, further entrenching the dominance of major labels.
The practice of strategic oversupply raises significant questions for competition and regulation, but its relevance depends on the existence of dominance in the respective part of the supply chain. Oversupply does not become problematic when independent artists or small publishers increase their output, but when it is deployed by large record labels, their affiliated publishing arms, or dominant streaming platforms. In these concentrated markets, oversupply can be used strategically to reinforce market power and limit opportunities for rivals. The challenge lies in proving intent and harm. Unlike price-based abuses, oversupply appears as increased productivity, making it harder to classify as anticompetitive.
At the label and publishing level, dominance is grounded in catalogue size, market share, and the reputational capital of superstar artists and songwriters. Oversupply by these firms can crowd playlists and licensing markets with content tied to highly recognizable names, exploiting both scale and reputation to marginalize smaller competitors. At the platform level, dominance arises from control over discovery mechanisms. Streaming platforms act as gatekeepers to consumer attention. While they may not produce music directly, their algorithmic and playlist curation can amplify oversupply strategies by dominant suppliers, multiplying exclusionary effects.
The challenge for regulators lies in distinguishing between producing and distributing a large amount of content, based on consumer demand, as a normal business strategy and oversupply as an exclusionary practice by dominant firms. Oversupply often appears as increased productivity and can be conflated with genuine creative output. Yet there is an important distinction: real innovation in music and cultural markets expands consumer choice and enriches diversity, while strategic oversupply tends to reproduce similar or redundant content designed primarily to capture algorithmic visibility. A regulatory framework must therefore differentiate between innovation-driven output and saturation tactics that serve mainly to entrench incumbents.
Emerging digital regulations and sector-specific oversight can help address these concerns. Transparency obligations could shed light on how recommendation systems and playlist algorithms amplify oversupply, while obligations for gatekeepers may open avenues to require non-discriminatory curation practices, ensuring that independent labels and publishers are not systematically disadvantaged.
Possible interventions include:
Regulators and policymakers must rethink how competition principles apply in attention markets. Oversupply may not look like abuse in traditional terms, but in concentrated parts of the supply chain it can become a powerful abusive tool. Distinguishing between strategic saturation and real innovation is essential to safeguarding competition, cultural diversity, and consumer welfare in music and other cultural goods markets – however, it may be extremely difficult to differentiate between the two.
At first glance, oversupply may seem like harmless abundance: more music, more choice, more access. But in practice, it may be a strategic tool that allows dominant firms to entrench their position in highly concentrated markets. By exploiting the structure of streaming platforms, major labels and publishers may crowd out competitors, reduce cultural diversity, and distort consumer choice.
Final Takeaway: Strategic oversupply may be another under-researched antitrust challenge of the digital age. Recognizing and addressing it – across labels, publishers, and platforms – is essential to preserving competition, fairness, and cultural diversity in music and beyond.
